Supreme Court Declines Joint Employer Case

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The U.S. Supreme Court on January 8 denied a petition for a writ of certiorari in a key case involving the issue of joint employment that observers of labor policy have been watching with interest. The court’s decision leaves in place a dubious ruling from the U.S. Court of Appeals for the Fourth Circuit that adopted an overly broad interpretation of joint employment under the Fair Labor Standards Act (FLSA) that is at odds with other circuit courts.

In the Fourth Circuit case, several technicians working for a subcontractor of DirecTV alleged that they had been misclassified as independent contractors and unlawfully denied overtime pay. The technicians filed claims naming DirecTV as their joint employer and arguing that the company and its subcontractor should be held jointly and severally liable for any alleged violations of the FLSA.

A federal district court found that the technicians had not sufficiently demonstrated that DirecTV was their joint employer and dismissed their complaint. However, in January 2017 the Fourth Circuit found otherwise and reversed the district court.

Upon review, the Fourth Circuit noted that the district court relied on “out-of-circuit authority” that the circuit later rejected. Indeed, in its analysis of the case, the district court had cited a four-part test from the Ninth Circuit to evaluate whether DirecTV was a joint employer of the technicians. Under that test, the court considered whether DirecTV “(1) had the power to hire and fire the employee; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records. “

In its ruling, however, the Fourth Circuit found that the “fundamental question” in its analysis was “whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine – formally or informally, directly or indirectly – the essential terms and conditions of the worker’s employment.” In other words, the court focused on the relationship between two or more employers relative to each other, rather than a putative employer’s relationship to an employee and their terms and conditions of employment.

That legal analysis represented a departure from other circuit courts’ joint-employment analysis, and some observers thought such a split among circuits might impel the Supreme Court to settle the issue of which standard should be used. For whatever reason the Court opted not to do so, though it could revisit the issue at a later date.

Nevertheless, the Supreme Court’s action highlighted the need for a legislative fix to settle the ongoing ambiguity when it comes to joint employment. To that end, the House of Representatives passed the Save Local Business Act, which would provide such a permanent fix under both the FLSA and National Labor Relations Act. Hopefully the Senate will follow suit.

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